Hearing:	3 August 2016
Court:	Wild, Mallon and J Williams JJ
Counsel:	K J Crossland and J S Langston for the Appellants G D Pearson and L M Pelly for the Respondents
Judgment:	15 December 2016 at 10.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe determinations in paragraph [119(a), (b) and (c)] of the judgment of the High Court are set aside.
CThe proceeding is remitted to the High Court for directions as to the filing of an amended statement of claim.
DThe respondents are to pay the appellants costs for a standard appeal on a band A basis plus usual disbursements.

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REASONS OF THE COURT

(Given by Mallon J)

Introduction

This appeal concerns whether claims arising from alleged negligent advice were commenced too late. In the High Court Toogood J found they were and therefore could not proceed for determination at trial.[1]
[1]Roose v Duthie [2015] NZHC 2035.
The context is a property transaction that attracted tax liability. The transaction involved the sale of property by one entity, Denise Developments Ltd (DDL), owned and controlled by Ms Roose to another entity, DMR Development Ltd (DMR), also owned and controlled by Ms Roose. Ms Roose claims the transaction was entered into because the respondents gave negligent advice that it would not attract tax liability. She claims the transaction would not have been entered into had the negligent advice not been given.
There are two issues in this appeal:
(a)The first is whether the High Court was correct to find the cause of action in tort accrued when the agreement between DDL and DML was entered into, or whether it accrued when that agreement was settled. If it is the former, then it is common ground that the tortious cause of action is time-barred.
(b)The second issue is whether the High Court was correct to find that the time for bringing the contract and tort causes of action was not deferred on the basis the respondents had failed to disclose a conflict of interest once the Inland Revenue Department (the IRD) began investigating the transaction.

Background

The High Court judgment arose from the appellants’ application for determination of a separate question, namely the date their causes of action arose. It proceeded on the basis of the facts as pleaded, in the same way as would have been the case on a strike-out application.
The Denise Roose Butcher Family Trust owned a property in Pukekohe. Ms Roose was a trustee of the trust. Mr Duthie was also a trustee. He was an accountant and partner in Duthie Taylor Ruiterman (the first respondents are sued in their capacity as partners of the firm), which later became DRK Chartered Accountants Limited (the second respondent).
Ms Roose…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Roose v Duthie

Details

AGLC: Roose v Duthie [2016] NZCA 600
Case: [2016] NZCA 600
Decision Date: 15 December 2016 at 10.30 am

CaseChat Overview and Summary

The case of Roose v Duthie involved an appeal against the High Court's decision that claims arising from alleged negligent advice were time-barred. The appellants, Denise Roose, Denise Developments Ltd, and DMR Development Ltd, sought to sue the respondents, Craig Duthie and Kirsten Taylor-Ruiterman, in their capacity as partners of Duthie Taylor Ruiterman, and DRK Chartered Accountants Limited, for the alleged negligent advice. The Court of Appeal had to determine whether the High Court was correct in finding that the tortious cause of action accrued when the agreement between DDL and DMR was entered into, or when the agreement was settled. The second issue was whether the High Court was correct to find that the limitation period for the contract and tort claims was not deferred on the basis that the respondents had failed to disclose a conflict of interest once the Inland Revenue Department (IRD) began investigating the transaction.

The Court of Appeal found that the High Court was incorrect in its decision. The Court held that if the loss under the transaction was first suffered because of the tax liability, that loss was suffered on 2 May 2008, when the transfer from DDL to DMR took place. As the claim was brought on this date, the claim was not outside the limitation period. The Court also held that the High Court was incorrect in finding that a failure to disclose a conflict of interest during the IRD review and audit could give rise only to a new cause of action and could not postpone the contract and tort limitation periods under s 28 of the Limitation Act. The Court set aside the High Court's determinations and remitted the proceeding to the High Court for directions as to the filing of an amended statement of claim. The respondents were ordered to pay the appellants costs for a standard appeal on a band A basis plus usual disbursements.

Orders